Professional Documents
Culture Documents
2d 1212
Appeals from the United States District Court for the Southern District of
West Virginia, at Parkersburg. Charles H. Haden, II, Chief District Judge.
(CR-90-280)
ARGUED: James M. Bradley, Jr., Albright, Bradley & Ellison,
Parkersburg, West Virginia, for Appellant Payne; Jeff Chandler Woods,
Jackson & Kelly, Charleston, West Virginia, for Appellant Jackson;
Matthew Anthony Victor, Charleston, West Virginia, for Appellant
Nelson.
Appellants Otis Jackson, II, Kathy Nelson, and Charles C. Payne were
convicted of conspiracy to possess with intent to distribute and to distribute
cocaine and marijuana. See 21 U.S.C. 841(a)(1), 846. Jackson was also
convicted of conspiracy to defraud the United States by impeding the functions
of the Internal Revenue Service (IRS). See 18 U.S.C. 371. On appeal,
Jackson and Nelson claim that the Government's evidence was insufficient to
support their drug conspiracy convictions; that the Government's actions before
and during trial amounted to a pattern of misconduct; that the absence of blacks
from the jury venire deprived them of their Sixth Amendment rights; and that
their sentences were improperly calculated. Speaking for himself only, Jackson
claims that there was insufficient evidence to support his conviction for
conspiracy to defraud the United States. For his part, Payne claims only that the
evidence supporting his conviction was insufficient.
None of these claims has merit, and only the three sufficiency claims warrant
discussion.
I.
3
A.
4
To establish a violation of 21 U.S.C. 846, the Government must prove (1) that
there was an agreement to engage in conduct that violates a federal drug law,
and (2) that the defendant voluntarily became a party to that agreement. United
States v. Clark, 928 F.2d 639, 64142 (4th Cir. 1991).
The evidence that Payne conspired with Jackson was far from overwhelming,
but it was sufficient to enable a reasonable jury to conclude that Payne and
Jackson were in the drug business together. The Government presented
evidence that Payne sold marijuana, id. at 140, 197, 310-11, 335-36; that
Jackson was his source for at least one of the sales, id. at 141, 145-46, 197-98;
and that Jackson knew that Payne was a seller, id. at 311.
B.
7
To establish a violation of 18 U.S.C. 371, the Government must prove (1) the
existence of an agreement; (2) an overt act by one of the conspirators in
furtherance of the agreement's objectives; and (3) an intent on the part of the
conspirators to agree, as well as to defraud the United States. United States v.
Vogt, 910 F.2d 1184, 1202 (4th Cir. 1990), cert. denied, 111 S. Ct. 955 (1991).
Jackson was charged with conspiring with "persons known to the United States
Attorney" to defraud the United States "by evading and defeating the lawful
governmental functions of the Internal Revenue Service ... in the ascertainment,
computation, assessment and collection of the revenue." J.A. at 27. This is the
so-called "Klein conspiracy." See United States v. Klein, 124 F. Supp. 476
(S.D.N.Y. 1954) (recognizing, under 18 U.S.C. 371, conspiracy to defraud
United States by impeding functions of IRS), aff'd, 247 F.2d 908 (1957), cert.
denied, 355 U.S. 924 (1958). The Government's theory at trial was that Jackson
had conspired with Nelson to conceal the profits from his drug business. It is
undisputed that Jackson failed to file tax returns in 1987, 1988, and 1989, and
there was evidence that Jackson knew that the income from drug sales is
taxable, J.A. at 114, 223. The only remaining question is whether there was
We conclude that there was. First, there was abundant evidence that Jackson
and Nelson were partners in a drug business, and there was evidence that
Jackson did not keep any business records, id. at 153, 399, 536. The failure to
keep business records obviously impedes the IRS in the collection of revenue,
and it is not unreasonable to infer that the business partners' decision not to keep
records represented at least a tacit agreement to conceal their drug profits from
the IRS.
Second, there was evidence that Jackson and Nelson used drug proceeds to start
a ladies' undergarment store, and that they occasionally hid drugs in the store.
Id. at 223-24. It is a reasonable inference that at least one of the purposes of
starting that business-which folded after eight months-was to launder drug
money." Although several courts have specifically reserved the question of
whether conspiring merely to conceal the source of income is illegal under
Klein," Vogt, 910 F.2d at 1202-03, this court has upheld a Klein conspiracy
conviction where there was evidence of money laundering combined with
"inaccurate and false tax returns" and "other indications of tax evasion," id. at
1203; see also United States v. Hernandez, 921 F.2d 1569, 1575-76 (11th Cir.),
cert. denied, 111 S. Ct. 2271 (1991); United States v. Tedder, 801 F.2d 1437,
1446 (4th Cir. 1986), cert. denied, 480 U.S. 938 (1987).
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Third, there was evidence, in the form of testimony from Nelson herself, that
although Jackson and Nelson had discussed their obligation to file a tax return
for their undergarment business, they failed to do so. J.A. at 602-04. This
evidence, standing alone, is sufficient to sustain the Klein conspiracy
conviction.
II.
11
We have carefully considered the remaining claims, and conclude that they,
too, are without merit. For the reasons stated, appellants' convictions and
sentences are affirmed.
AFFIRMED